Introducing FedNow in New England and How the System Will Affect FIs' Instant Payment Strategies
Wrestling Payments Podcast: Season 1 - Episode 3
Episode Summary
NEACH recently conducted a survey with 145 participants about how the finance industry is adopting instant payments in New England. The respondents answered questions about available instant payment solutions and how they affect their strategy.
In this episode of Wrestling Payments, host Joe Casali touches upon FedNow, a new instant payment system, and shares participants' take on how this new solution will add to their operations.
Joe also discusses when participants plan to implement their chosen instant payment solution and their biggest concerns regarding the process.
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Podcast Expert
Host name: Joe Casali
What he does: Joe is the executive vice president at NEACH.
Company: NEACH / Podcast
Where to find Joe: LinkedIn
Podcast Insights
🎙65% are either working on or have an instant payment strategy. The survey involved 145 participants answering questions regarding available solutions and a soon-to-be-launched system, FedNow.
🎙53% of all participants said they are interested in FedNow ''send and receive.'' That means they not only want to receive transactions via the system but also take advantage of the sending option.
🎙About 20% are interested in implementing it in 2023. The same percentage of participants said that they are considering implementing it next year. Around 1.5% want to do it by 2025, while 50% have an undefined timeframe. ''In the financial institution industry, there's a lot of waiting and seeing, 'I want someone else to make the mistakes, and then I'll participate.'''
Episode Highlights
How Vital Is FedNow to Your Strategy?
''One of the interesting numbers here is, 'We are waiting on FedNow to go live, see how it goes, and then make a decision.' That was 31%. The highest one — getting its responses at almost 40% — was, 'We're waiting on our cores.'
That's an interesting comment. Are the cores ready for instant payments? That's a question. If you're a financial institution, you'll ask your cores to see where they are. Interestingly, 20% said there's no plan to connect, and 13% said it is especially important.''
How Vital Are Real Time Payments (RTP) to Your Strategy?
''15% have said, 'We're already on it,' and another 22% or 23% said, 'It is especially important.' Those are good numbers. We're looking at 37% are either on it or it's especially important. 34% are waiting on their cores. So there's a trend here. And no plans to connect to RTP, that was 26% of respondents. We had 141 of the 145 respond to that one.''
FedNow and RTP Have a Request for Payment Feature
''The request for payment lets a biller send an instruction that says, 'Hey, I want your financial institution to pay me, so I want your institution to be a sender.' It has all the instructions in there to get a bill paid.
But it's not that they're sending a payment; they're sending an instruction for your institution to send a payment to that receiver. That's a newer feature of instant payment systems. And it looks like there's a lot more interest in the FedNow request for payment than the RTP request for payment. But 10% and 15%, it's relatively the same number.''
The Biggest Concern Regarding Instant Payment Systems
''The biggest concern was fraud. We're at 59% of all respondents, probably the highest on the presentation. So 59% said, 'We are concerned about fraud.'
I have to do my part here and say that it is not faster payment fraud; it's a fraud. Just like ACH fraud is not ACH fraud; it's an account takeover; it's phishing; it's an email compromise. So it's any number of vectors of fraud, but it just happens to be in the ACH network.
The concern here, and I think it's a heightened concern, I don't think the fraud is any different. Maybe the implications are bigger. And this is my opinion only.''
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